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New Age IT Businesses | Are you investing in these?

Information technology service sector of India is well known and well established now. Biggest IT service company in the world is now an Indian company and there are total 4 Indian companies in the world top 10 list. These are TCS, Infosys, HCL Tech and Wipro. 

However, these companies are traditional IT service providers and are considered as "Old Age" IT service companies. A lot of investors consider these matured and don't expect significant growth in this industry now. 

Image source: Economic Times

In this digital world, technology is rapidly changing and companies are adapting to newer technologies. With these changes comes new security and technical challenges and there are companies which are converting these challenges into opportunities and working in this highly growing segment. Following are few technologies or areas to name which were not common few years back.

  • New consumer conversions (acquisitions, engagements and transactions) through relevant mobile advertising
  • An online to offline (“O2O”) platform that converts online consumer engagement in to in-store walk-ins
  • Internet-of-Things
  • Blockchain 
  • Omni-channel communication
  • Cloud computing
  • Big data engineering

If you believe that above technologies are future, then you should consider buying stocks of companies which are into these for your high growth portfolio.

Big IT service companies as mentioned above are also working in these but given the size of those giants, growth can maximum be in early two digits whereas few new companies have entered the stock market which are only into these new techs and are growing at a massive 20-30% per annum. Given this size of opportunities here it is obvious that a lot of investors are investing in these companies and hence these are trading at very high PE multiples (almost all trading at more than 100). Route Mobile, Affle India, Happiest Minds and Tanla Platforms are few examples of listed companies working in this space.

Let me know your views in comment box below.

Discl - Not a stock recommendation. 

 

About author:

Manish Negi is a Chartered Account and an experienced auditor. 

Twitter -  www.twitter.com/camanishnegi

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